The speedy spread of COVID-19 has slowed Colorado’s economy, state economists say.
In December, Colorado was projected to collect an extra $832.5 million in revenue for the next fiscal year, which begins on July 1. But, according to a quarterly revenue forecast by the Legislative Council, that revenue projection was adjusted down to just $27.3 million for next year. The forecast for the following 2021-22 fiscal year was reduced by $378.9 million.
Revenue next year is expected to fall below a cap under the Taxpayer Bill of Rights, or TABOR. This means there will be no TABOR refunds next fiscal year.
The virus “has caused significant economic disruptions in the U.S. and globally,” the report states.
“The travel industry experienced plummeting reservations on cancelled conferences, a lack of demand for flights, fewer hotel stays, and cruise cancelations. Colleges and universities have cancelled in-person instruction, major sporting and civic events have been cancelled or delayed, schools have been closed for extended periods, and the public has responded by preparing for periods of self-quarantine,” the report continues.
The forecast comes as the Centers for Disease Control recommends the cancellation of any gathering of 10 people or more and Denver Mayor Michael Hancock ordered that restaurants and bars stop serving sit-down meals. This past weekend, Gov. Jared Polis recommended that all ski resorts in Colorado temporarily shut down.
The efforts, known as “social distancing,” are designed to slow the spread of the highly contagious new coronavirus so as to not overwhelm the state’s health care facilities. As of Monday afternoon, state health officials said there were 160 confirmed cases of COVID-19, the disease caused by the new virus. But health experts say this number is largely a reflection of testing capacity and the actual number of infections is likely much higher.
“I would call the economic situation in complete flux, and until we have a much better idea what’s going on I wouldn’t put much stock in any economic forecast, although we know the news isn’t good,” said Gov. Jared Polis said in a statement.
The forecast could have real implications for state policy, including the governor’s $27 million effort to increase preschool enrollment. The state might not be able to add any money to K-12 schools, either. Lawmakers voted to recess for two weeks on Saturday and have yet to pass a state budget, among other unfinished business this session.
“We knew this would be a difficult budget year, and it’s clear that uncertainty in the economy due to the COVID-19 pandemic will make an already tight budget even tougher than we had anticipated just a few months ago,” said Rep. Daneya Esgar, a Democrat from Pueblo who chairs the Joint Budget Committee.
“We remain committed to delivering a bipartisan and balanced budget that supports critical priorities for Coloradans in every part of our state, and will also be highly attuned to the immediate needs of the state as we respond to the COVID-19 pandemic. Public health and safety are a key priority at this time.”